In the warm summer months, when the sun sparkles on Amsterdam's narrow canals, the owners of the city's famously crooked, gabled townhouses drag their sofas outside and turn the sidewalk into their living room. Amsterdamers are not at all self-conscious about making their private spaces public; after all, most of the windows here don't have curtains.

"Only the foreigners use curtains," says Colin P. Finnegan of FG Stijl, an interior design firm that handled the recent renovation of one of the city's top boutique hotels, the Dylan. "The trend is thought to date back to the Reformation, when the country was converting from Catholic to Protestant," Finnegan explains. "If you closed curtains, it meant you might be praying at the dining room table. No curtains says, 'I'm very open. I have nothing to hide.' It makes for great fun as you walk along the canals and peek inside."

Advertisement - Continue Reading Below

That's what one first notices about Amsterdam's picture-perfect center: Although the 800-year-old city is pristinely maintained, it's very much lived in. In fact, now that the Dutch government has been cracking down on some of the city's famous marijuana-dispensing coffee shops, the big concern of the moment is that the Dutch government wants things too perfect.

"We don't want to be called the Venice of the North anymore," says interior designer Edward van Vliet. "We have to be careful that our city doesn't turn into a museum."

But Van Vliet isn't really that worried. What saves Amsterdam from looking like a historic village preserved in a snow globe is the fact that it has always been a city adept at mixing old with new. Two of its most beloved museums—the Stedelijk and the Rijksmuseum— are being drastically reinvented for the 21st century, and will reopen in the next year. Both are located, along with the Van Gogh Museum, on the Museumplein, a grassy, open park bordering Amsterdam's elegant Old South neighborhood. This fall the Stedelijk will move into its renovated digs, now twice the original size thanks to a sleek white annex designed by Benthem Crouwel. For the first time the museum will be able to show off its extensive collection, which includes some 8,000 objects and 50,000 works of graphic design. The castle-like 19th-century Rijksmuseum building, originally designed by the legendary Dutch architect Pierre Cuypers, has managed to keep some of its iconic masterpieces, including Rembrandt's Night Watch, on display in the Philips wing, while work is completed on the main building. The renovation, by Spanish architects Antonio Cruz and Antonio Ortiz, restores Cuypers's original layout and provides more exhibition space and several modern additions, including a new Asian pavilion.

But it's not just the city's museums that are being reinvented. One of the things that Amsterdam is extremely good at is repurposing historic buildings and turning them into stylish, up-to-the-minute hotels. The most anticipated hotel opening of 2012 is the Andaz Amsterdam, a former library on Prinsengracht, which is being trans- formed by local talent Marcel Wanders. Wanders says the interiors will play off the fact that the building has two very different façades: a concrete one from the 1970s and, on the other side, a series of connected historic canal townhouses. "The look," Wanders assures, "will be anything but another minimal design hotel."

Advertisement - Continue Reading Below

Meanwhile, the new Conservatorium Hotel, designed by Piero Lissoni and perfectly situated across the street from the Stedelijk, takes luxury to the nth degree. The building started out as a bank in the 1900s and then became a school of music (hence the name). The meticulously restored west façade has been enclosed in an enormous glass box, creating a soaring, light-filled atrium that holds the lobby and the buzzing Conservatorium Brasserie.

--> --> --> -->

From the moment it opened last December, the Conservatorium has been drawing old-money Amsterdamers, a group notoriously hard to please, to its main dining room, Tunes, which is overseen by one of the Netherlands' most celebrated chefs, Schilo van Coevorden. He's at the helm of Amsterdam's burgeoning culinary scene, serving up beautifully executed dishes—inspired by his world travels and a three-year stint in Spain—that use mostly local ingredients. "When I was in Spain I had dinner with Ferran Adrià [of El Bulli]," Van Coevorden recalls. "He told me, 'You have the best oysters and lamb, and incredible cheese.' He made me appreciate how much fantastic produce we have in the Netherlands. Amsterdam is starting to develop its own style of cuisine."

The city's culinary talents might be just starting to blaze a trail forward, but the country's design stars have long since colonized the world. Thanks in part to the influential Design Academy Eindhoven, the Netherlands has produced a plethora of cutting-edge designers, including Wanders, Hella Jongerius, and Jurgen Bey. Their work, along with some of the latest creations from the country's next generation, can be found throughout the city. Two of the most notable decor meccas are Droog, a collective founded in 1993, and the Frozen Fountain, still making waves in its 20th year.

Advertisement - Continue Reading Below

At their two-story space on Prinsengracht, the Frozen Fountain's owners, Cok de Rooy and Dick Dankers, continue to sell old favorites, like Piet Hein Eek's repurposed wood tables, but they also offer newfound objects that catch their discriminating eye. "When you surround yourself with things you love," Dankers says, "that creates magic. Everyone asks me about trends. And you know what? The trend now is that there are no more trends. That's very liberating."

There are, of course, new emporiums by the dozen, including the bohemian-chic concept shop Friday Next on the flourishing Overtoom, and the sprawling Pols Potten in the Eastern Docklands. Before it finally found a permanent location last month, on Haarlemmerdijk, the Store Without a Home, a pop-up shop founded by Janwillem Sanderse, was more difficult to locate. An interior designer with a lot of ambition to promote young talent but without much seed money, Sanderse had been taking his quirky furnishings and fashions with him from one temporary, affordable location to another since the summer of 2010.

Most Popular

--> --> --> -->

"Up-and-coming designers are no longer just following the path of one master," Sanderse says. "They use a variety of inspirations, such as heritage brands or their grandmother's crochet work, and try to work with recycled materials as much as possible." He points to the work of local designer Pepe Heykoop, whose futuristic furniture includes armchairs found on the street that are then covered with leftover leather.

It's young creative types like Heykoop who are also helping to pioneer the city's fringes. His studio is located in North Amsterdam, a large industrial neighborhood across the IJ river from Centraal Station that feels a bit like Williamsburg, Brooklyn, did in the late 1980s. Developing this still raw district, along with the Eastern Docklands, has been key to moving the city back to the water.

In terms of architecture, Amsterdam has recently entered yet another one of its golden ages, the seeds for which were planted about 30 years ago. In the '80s, forward-thinking urban planners began to spearhead a gradual return to the waterfront. Iconic buildings, such as the Nemo science center by Renzo Piano, have been popping up along the IJ river's edge over the last decade. The most striking structure is the Eye Film Institute, which opened in April. Designed by the Austrian firm Delugan Meissl, it perches over the water like a futuristic white butterfly. The Eye has managed to convince even the most skeptical local to accept the fact that North Amsterdam is now officially a hot new part of the city.

"Amsterdam is harvesting right now," says Maarten Kloos, director of ARCAM, Amsterdam's center for architecture, whose own curvaceous structure overlooks the harbor. "While there are some serious economic problems for architects and developers, we are now seeing the results of the wealth of the city before the financial crisis."

--> --> --> -->

There may be an exciting mix of tastemakers shaking up the fringes, but Amsterdam's fairy-tale center continually beckons. Some of the city's most avant-garde talents, such as the young fashion designer Iris van Herpen, still prefer to work in the old part of the city. Van Herpen, who made her mark on the international fashion scene with her otherworldly, sculptural gowns, which have been worn by Björk and Lady Gaga, likes to stroll along the harbor, where her new atelier is located; the city's historic architecture inspires her, she says, as does the feeling that everything, from vice to virtue, is out in the open for all to see. "Amsterdam is transparent," she says. "Hookers exist all over the world, but here it's not hidden. The same goes for other things, like politics. It's nice to have that around you."

Advertisement - Continue Reading Below

The red-light district, De Wallen, in fact, is becoming a popular draw for a new generation, as the Dutch government is helping to upgrade the area rather than eradicate it. Rob Wagemans, the founder of the hip design firm Concrete, chose to move the company's headquarters to the heart of the area. "Up until now the red-light district has been very lowbrow," says Wagemans. "The city wants to mix in some high-end culture to attract a more interesting crowd."

A sexy, high-low mix is already starting to happen with the recent openings of two trendy restaurants in De Wallen: Restaurant Anna, a spare, handsome space, and Restaurant Lastage, a more formal dining room overseen by chef Rogier van Dam that has earned a Michelin star. Concrete's next project is a striptease club geared toward, Wagemans says, a "five-star traveler, with cool interiors and performance that's erotic and theatrical."

Still, Wagemans warns that the changes in the red-light district shouldn't be too drastic. "Amsterdam is still sex, drugs, and rock 'n' roll, and we shouldn't lose that," he says. "Even if you never actually engage in any of it, the fact that it's here creates freedom. It gives you the feeling that everything is possible."

--> --> --> -->

ESSENTIAL AMSTERDAM

The country code is 31.

Bike like a local. Amsterdam is one of the most bike-friendly cities in the world, with paths throughout its center. Rent a bike at MacBike, which also offers tours, including one that highlights the modern architecture of the Eastern Docklands.

Advertisement - Continue Reading Below

Cruise the canals. The other favored way to get around in this watery city is by boat. Hop on one from Canal Bus or rent your own (privateboattours.nl).

Do the nine streets. This shopping-centric area (theninestreets.com) offers a lively mix of cafés and boutiques, like Van Ravenstein (Keizersgracht 359), with fashions by Dries Van Noten and Viktor & Rolf, and DR Wonen (Hartenstraat 27), a cool home shop.

WHAT TO SEE

Eye Film institute, IJpromenade 1, 20-589-1400; eyefilm.nl: This futuristic-looking center in North Amsterdam is the city's latest architectural and cultural icon. On offer: top-notch film programs and a stylish restaurant.

Most Popular

Museum of the Amsterdam Canals,Herengracht 386; For insight into the city's original urban planning, check out the newly renovated Het Grachtenhuis museum, which celebrates the engineering and creation of Amsterdam's historic canals and townhouses.

Museumplein: A verdant square near the city center is the setting for three world-class museums: the Stedelijk contemporary art and design museum, the Van Gogh Museum, and the Rijksmuseum, home to Rembrandt's Night Watch and Vermeer's Kitchen Maid.

Conservatorium Hotel, Van Baerlestraat 27, 20-570-0000; conservatoriumhotel.com: A luxury property with 129 rooms and suites, stellar service, an expansive spa, and a hard-to-beat location across from the Museumplein.

Grand Hotel Amrâth Amsterdam, Prins Hendrikkade 108, 20-552- 0000; amrathamsterdam.com: The Art Deco details of this former shipping house have been meticulously pre-served, but the rooms are spacious, with a modern take on Art Nouveau style. Those on the upper floors offer stunning water views.

Miauw Suites, Hartenstraat 34, 646-036-688; miauw.com: In the heart of the Nine Streets, each of four suites boasts big windows overlooking the canal, pastel lacquered floors, and a desktop Mac.

Gartine, Taksteeg 7, 20-320-4132; gartine.nl: A tiny café that uses local ingredients, Gartine is a popular spot for high tea and pastries.

Grand Cafe-Restaurant 1e klas, Centraal Station, 20-625-0131; restaurant1eklas.nl: This bustling café in Centraal Station is a practical meeting place for coffee and cake amid an outstanding Arts and Crafts interior.

Friday Next, Overtoom 31, 20-612-3292; fridaynext.com: The brainchild of two interior designers, this 4,000-square-foot space is filled with an eclectic mix of vintage furnishings, modern Dutch design, and hip fashion accessories.

The Frozen Fountain, Prinsengracht 645, 20-622-9375; frozenfountain.nl: This legendary shop sells a dynamic mix of contemporary furniture and ceramics, as well as charming tea towels.

Moooi Amsterdam, Westerstraat 187, 20-528-7760; moooi-gallery.com: Enter the playful world of Moooi, where whimsical lighting and mod furniture is on full, eye-catching display.

The Otherist, Leliegracht 6, 20-320-0420; otherist.com: The pair of San Francisco expatriates who operate this shop have filled the small space with all the objects that have caught their fancy—from a cardboard moose head to ceramic glove molds to mounted butterflies.